SEC Adopts Rules Relating to Section 16 Reporting

In January 2026, we discussed Congress's adoption of the "Holding Foreign Insiders Accountable Act" (the "Act"), and its impact on foreign private issuers. Directors and officers of these companies will shortly be required to file reports as to their holdings of their companies’ equity securities, and their trading in those securities. Our article may be found here.

Updated Regulations

The Act required the SEC to adopt new regulations to effect the Act's provisions, which the SEC did on February 27, 2026. The SEC's adopting release may be found here.

The new rules do not cover significant ground not addressed by the Act; they represent a fairly straightforward application of the Act's provisions:

• The SEC amended Rule 3a12-3(b) to remove entirely the current exemption from Section 16 for foreign private issuers, and replaced it with exemptions solely from the Section 16(b) short-swing profits rules and the Section 16(c) short selling prohibition.
• The SEC amended Rule 16a-2, which identifies the persons and transactions that are subject to Section 16, to specifically exclude 10% holders of foreign private issuers' equity securities from the requirements of Section 16(a), as contemplated by the Act.
• The SEC updated the text of Form 3, 4 and 5 to reflect the changes required by the Act, and also updated these forms to include an optional field for a non-U.S. trading symbol and a country code as part of the address of the reporting person (together with additional technical updates).

As previously discussed, directors and officers of foreign private issuers, possibly with the help of the company's legal department, should begin to prepare their initial filings with the SEC. In addition, foreign private issuers may seek to consider a variety of their compensation and insider trading policies in light of the new rules, which will add a degree of transparency to the compensation and trading of officers and directors.

The provisions of the Act and the new regulations will become effective on March 18, 2026.

Exemptions for Specified Countries

On March 5, 2026, the SEC issued an order, which may be found here, which exempts from the reporting requirements of Section 16(a) the directors and officers of certain foreign private issuers. This exemption is available for a company that is (i) incorporated in a “qualifying jurisdiction" and (ii) subject to a “qualifying regulation" (as these terms are defined in the order). These qualifying jurisdictions are: Canada, Chile, the European Economic Area, South Korea, Switzerland and the United Kingdom. 

To qualify for the exemption, these officers and directors must comply with the applicable non-U.S. regulation. If a director or officer for Section 16 purposes is not required to file reports under the rules of the relevant non-U.S. jurisdiction, due to, for example, the nature of their position and how it is treated by the qualifying regulation, then that person must file Section 16 reports. In addition, any report filed under a qualifying regulation must be made available in English to the general public within no more than two business days of its public posting. For those jurisdictions that do not enable the relevant reports to be filed in English, then the English-version of the report could be made publicly available on the relevant company's website. 

In granting the order, the SEC identified several criteria that it used to identify the jurisdictions that would be subject to the relief. These criteria are helpful to consider how the SEC would evaluate proposed exemptions for additional jurisdictions, and whether they should receive comparable treatment.

The new exemption will remove a significant portion of foreign private issuers from the scope of the new filing rules. Issuers will want to confirm that the scope of the filing persons outside of the U.S. is comparable to the persons that would be required under Section 16, so that any differences can be addressed. Some issuers will need to establish a page on their investor relations website to enable investors to obtain the English language version of these reports.